Minister Chambers commences long term funds to safeguard & protect future State investment in public services & infrastructure

-Future Ireland Fund has potential to grow to more than €100bn with another €14bn for Infrastructure, Climate & Nature Fund

Annual contribution of 0.8% of GDP to Future Ireland Fund 2024-2035 will protect public services for the long term.
With annual contributions, growth in GDP and potential return from investments, the Fund has the capacity to grow to €100 billion by 2040.
The Infrastructure, Climate and Nature Fund will secure capital expenditure through the economic cycle.

The Minister for Finance, Jack Chambers T.D. this week (30 July) signed the commencement order to officially establish the Future Ireland Fund and Infrastructure, Climate and Nature Fund.

This follows the enactment of the Future Ireland Fund and Infrastructure, Climate and Nature Fund Act on 18 June 2024.

The Future Ireland Fund will help deal with future expenditure pressures including ageing, climate, digitalisation and other fiscal and economic challenges. Its purpose is to support in a consistent and sustainable manner, State expenditure from 2041 onwards.

Annual contributions will be made to the Future Ireland Fund from 2024 until 2035, after which further contributions can be provided through a Dáil resolution. There is no limit on the potential size of this Fund.

For each year from 2024 to 2035, 0.8 per cent of GDP will be transferred to the Fund from the Exchequer. Taking account of annual contributions, growth in GDP and potential return from investments, the Fund has the capacity to grow to €100 billion by 2040.

The Infrastructure, Climate and Nature Fund will seek to deal with the pro-cyclicality of public spending and to assist with climate change objectives and nature, water quality and biodiversity issues. The Fund will provide for resources for spending in a future downturn to support expenditure through the economic and fiscal cycle and to support designated environmental projects.

€2 billion will be transferred to this fund each year from 2024 to 2030.

The National Reserve Fund will be dissolved later this year and its resources will be transferred to the new funds.

Speaking today, the Minister for Finance, Jack Chambers T.D. said:

“Ireland’s public finances are currently in a strong positon, underpinned by record Corporation Tax receipts, which last year reached nearly €24 billion. It is essential that we take action now to secure the public finances over the long term to ensure we can meet the future expenditure requirements we know will arise.

I am delighted to commence the majority of the Future Ireland Fund and Infrastructure, Climate and Nature Fund Act to establish these new Funds. The remaining sections of the Act will be commenced over the coming months.

The next step is to finalise the investment strategies for the new Funds and make the transfers to the Funds from the Exchequer and from the National Reserve Fund. By the end of 2024, there will be c.€10 billion in the new funds.

The Act provides for an annual Exchequer contribution from 2024-2035 to the Future Ireland Fund, which will ultimately provide a revenue stream to help meet demands posed by a wider range of issues including demographic changes, digitalisation, de-carbonisation and de-globalisation.

With annual contributions, GDP growth and potential return from investments, there is a potential for the fund to grow to around €100 billion by 2040, which will give the State substantial firepower to manage the increased demands on expenditure in the decades ahead.

The second Fund being established is the Infrastructure, Climate and Nature Fund, which will provide an essential buffer for expenditure by the State during an economic downturn. This will help smoothen the investment cycle and help support employment at a critical time of economic distress. The fund will also provide support to designated environmental projects that will contribute to a range of climate, water and biodiversity objectives.”

The Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe T.D. said:

“Following the enactment of the Future Ireland Fund and Infrastructure, Climate and Nature Fund Act in June, I am pleased that both funds have been officially established.

The Future Ireland Fund is a long-term savings fund that will deal with future recognised expenditure pressures and economic challenges. By putting money aside now, we will support future Government expenditure to address issues such as ageing, climate and the digital transition and help to ensure that the burden of these future costs will be manageable.

The Infrastructure, Climate and Nature Fund will seek to deal with the pro-cyclicality of capital spending. A €14 billion reserve will be established over the period 2024 to 2030. The Fund will provide support for the economy in times of exceptional need, helping to smooth the investment cycle and avoid the ‘stop-start’ public capital investment that we have experienced in the past. It will also invest in the transition to a low carbon economy, with €3.15 billion being set aside specifically to invest in environmental projects that address climate change issues and nature and water quality degradation over the period 2026-2030.”

Notes to Editor

The Future Ireland Fund and Infrastructure, Climate and Nature Fund Act 2024 has now been published and is available on Oireachtas.ie .

Future Ireland Fund

This is a long-term savings fund to deal with recognised expenditure pressures including ageing, climate and the digital transitions.
There is no limit on the potential size of this Fund. Contributions will be made to the Future Ireland Fund until 2035, after which a decision can be made on further contributions following a Dáil resolution.
The level of contribution was agreed in the context of Budget 2024. For each year from 2024 to 2035 0.8 per cent of GDP will be invested in the Fund.
The contributions may be reduced or halted in the following year, where the Minister is satisfied following an assessment that there is or is likely to be a deterioration or a significant deterioration in the economic or fiscal position of the State.
In the event of a “deterioration”, the Minister, following a Dáil resolution, may reduce the contributions to 0.4% of GDP.
In the event of a “significant deterioration”, the Minister, following a Dáil resolution, may reduce the contributions to 0% of GDP.
In making the determination for the following year’s payment, the Minister will use the GDP figure available for the most recently completed year (in the case of the 2024 determination of the 2025 payment, that would be the GDP for 2023).

Infrastructure, Climate & Nature Fund

The Fund will make resources available in a future downturn to support expenditure through the economic and fiscal cycle.
It will help to maintain growth-enhancing investment through periods of lower or negative growth and often where capital expenditure is reduced as a response.
This Fund will also support economic growth during a downturn, including capital projects, with the ultimate decision on the use of the resources of the Fund resting with Government.
The Fund will be released to support counter-cyclical expenditure where the Minister is satisfied that following an assessment that there is or is likely to be a significant deterioration in the fiscal or economic position of the State, and where the Government and Dáil Éireann have decided to halt the payments to the Future Ireland Fund and the Infrastructure, Climate and Nature Fund.
Up to 25% of the value of the Fund as at the end of the previous year may be drawn down for this purpose.
In recognition of the need for additional investment to assist Ireland deal with the transition to climate neutrality, and deal with nature, water and biodiversity degradation, there is a second avenue of access to the Infrastructure, Climate & Nature Fund, specifically related to the achievement of climate and nature goals.
Up to 22.5% of the balance of the Infrastructure, Climate & Nature Fund may be drawn down to support climate and nature related projects in any given year from 2026, up to a cumulative maximum of €3.15 billion by 2030.

Future of National Reserve Fund

The National Reserve Fund will be dissolved later this year.
€2 billion will transfer from the NRF to the Infrastructure Climate and Nature Fund. The balance standing to the credit of the NRF will then transfer to the Future Ireland Fund. The amount transferred will depend on the exact value of the Fund at the date of transfer. At the end of 2023, the Net Asset Value of the Fund was c. €6.2 billion.

Investment of the Funds

The responsibility for investment and management of the funds will be allocated to the NTMA, who manage the existing Ireland Strategic Investment Fund (ISIF).